Successful businesses know the importance of investing in their employee value proposition (EVP). Many have comprehensive performance metrics and KPIs to measure and report on multiple aspects of their EVP including benchmarks for salary and incentives, training and development and employee engagement and satisfaction. According to Andrew Daly, Group Executive Customer Development for Maxxia, your benefits program could be the element that’s holding you back from creating that perfect package to attract and retain talent.
Why do employee benefits still matter when businesses have so many ways to make staff feel valued?
It’s no secret that human capital is the most critical asset for any organisation. Brands compete on their customer service, innovation and R&D talent. At the same time recruiting staff is time consuming and expensive. So once you’ve found the right talent, retaining that talent is a good investment.
To stay competitive organisations are making a big commitment to getting the right staff on board and keeping them – from defining and developing workplace culture to career progression and training. Employee benefits are just one of many elements that can make or break that sense of value and engagement we want staff to experience through their work.
Some of these benefits – such as the superannuation guarantee – are mandatory, a box to be checked as part of the on-boarding process. Others, like health insurance, might be discretionary but are often treated in much the same way. Perhaps that’s why all benefits tend to be seen as standard perks an employer is expected to offer rather than something that can deliver substantial value to both employees and the business.
So while “employee benefits program” might be the words that make new staff glaze over during the induction process, they can actually be very effective in securing engagement from the outset. By providing access to salary packaging benefits that enable savings on a range of goods and services like owning a new car, or the cost of living in a remote area for work, staff can feel as if they’ve enjoyed an unexpected windfall. And if they’re thinking about leaving in the future, reliance on a range of salary packaging benefits for cost-effective, tax efficient extras and essentials can be an important reason for staying put.
What can a best-in-class benefits package contribute to the employee experience?
There are two main areas where employees can reap the rewards of a really strong benefits package. They give back to staff in terms of both time and money saved and that’s why they can make such a big difference to quality of life when you deliver these benefits to a much higher standard.
With novated leasing of vehicles for example, the immediate dollar value comes from savings in tax which can be more or less substantial depending on the marginal tax rate of the employee. But there’s also a whole raft of further savings that come from competitive pricing on purchase and insurance and genuine value from a trusted network of service and maintenance providers. So the financial savings are there from the outset and for the life of the vehicle.
The less tangible, measurable value is in the convenience, both immediate and ongoing of having every aspect of managing your vehicle taken care of by a third party. When one company were making the call on whether to withdraw novated leasing from their benefits package, we surveyed employees on what they valued most about the offering. What we found was how much importance they placed on not having to be concerned with the hassle of securing a vehicle, organising service and maintenance and registration renewal. Most of all, they don’t need to have the headspace or discipline to budget for these large occasional expenses because they’re all included in a regular pre-tax payment.
Car ownership is likely to be in the top three household expenses for many employees. If they also own a home, paying off the mortgage takes perhaps the greatest chunk of anyone’s wages. For one of our clients with staff spread out across remote areas, we investigated the potential savings for salary packaging home loan payments. The average tax relief per staff member was expected to put $4,000 each year back in their pocket. When you present anyone with that kind of incentive, it gives them a sense that their employer is really looking after them by making something as fundamental as housing more affordable.
When it comes to measuring performance, why are employee benefits packages so often overlooked?
When talent is scarce, it’s very important to keep tabs on how likely your people are to stay in their jobs. Investing a substantial share of HR time and resources in monitoring the full gamut of employee engagement metrics has become the norm for businesses in the 21st century. Reporting on performance against KPIs and benchmarks for job satisfaction, career progression and alignment with organisational values is considered a vital early-warning system for potential problems with productivity and staff retention.
As a provider of employee benefits, we’re constantly finding that the same standards of scrutiny just don’t apply to this segment of the whole employee value proposition. The general measure of satisfaction with an existing employee benefits program is that no complaints are received and therefore it’s achieving a desirable level of performance!
Unfortunately, this lack of negative feedback usually signals a widespread lack of engagement with and take-up of employee benefits. Given their significant potential to provide value to employees and drive their engagement, the absence of employee benefits from the metrics dashboard is something that’s important to address.
This is why we offer industry specific benchmarks an employee benefits program should expect to achieve. We find this to be a critical part of reaching an absolute verdict on how a program performs, both in terms of actual savings to each individual employee, but also as a measure of overall value to the business. When our benefits assessment process shines a light on the comparative value a company is realising from their own offering, it really changes the whole conversation about how satisfied they are with what they’re delivering.
What should a business be looking for in an employee benefits package?
Achieving or exceeding that benchmark can be a major challenge in a number of ways. Part of the formula that drives participation in benefits programs is offering a broad range of perks that suit the demographic composition and lifestyle of employees. Setting up multiple benefits has often been taken on by HR, who might engage a whole range of sub-contractors, from the gym around the corner to the fleet management company. When there are problems, with staff complaints about car service arrangements for example, or reconciling benefits and liabilities when a member of staff leaves, no one wants to accept the responsibility or financial fallout.
Outsourcing salary packaging transactions and their associated risks to a single expert provider is just one of the ways a business can counter the internal perception of program delivery as being more trouble than it’s worth. When payroll no longer see salary packaging as a task that stretches the capability of their current technology, then at least one of the barriers to scaling up delivery of your employee benefits program is taken care of.
Another significant advantage of getting the experts involved is securing the capacity and commitment it takes to get staff educated and motivated about what’s in it for them. By segmenting communication to different groups of staff according to their age and lifestyle needs, an internal campaign can use a whole range of channels – emails, posters, face-to-face and online – to increase awareness and participation. With this type of internal marketing approach, companies can soon reach the point where reaping the benefits of salary packaging is the rule rather than the exception, and the savings for staff are something worth broadcasting.
High standards and a consistent, professional level of interaction with employees builds the foundation for delivering intangible value that can be the difference between success and failure in the employee engagement stakes. Staff will feel both cashed up and cared for if they’re given multiple opportunities to interact positively with their benefit provider – from reports and updates on what they’ve saved to reassuring reminders that all ongoing responsibilities for their vehicle, home or chosen service are well in hand. It’s by providing peace of mind in an uncertain world that businesses can be seen as caring for employers in a way that has real meaning for them.
Let’s not forget that peace of mind for all company stakeholders relies on a stable financial position. A Fringe Benefits Tax (FBT) shortfall, adding up to as much as $600k for large corporates, can become a big problem when not accounted for in financial forecasts. By monitoring FBT liability that can arise from employee benefits, a premium provider can ensure there are no unpleasant surprises for balance sheets and profit & loss outcomes.
To find out how your benefits program performance measures up contact Andrew Daly and his team on 03 9097 3361 today or visit business.maxxia.com.au/performance